>> samsung comes up short. growing competition from china. >> can bmw keep its lead? we will get the latest info on company sales this morning area >> government gets more leeway on debt and deficit targets. more information from italy and france in the wake of austerity. >> welcome to "countdown." i'm ryan chilcote. bloomberg reporters are
standing by across the world, ready to deliver the stories that will drive your day. the best of $35 million worth of samsung product. berlin nichols is in following bmw as it struggles to keep its lead against audi and vw. finance ministers gather. coming up on our break, the gold industry supports plans to change how the precious metals benchmark is decided. we have an exclusive interview with the world gold council's natalie dempster. that will be at 7:30 london time. samsung has disappointed investors with its
second-quarter earnings. it is protesting a recovery for later in the year. eh? ng misses the mark, >> the third straight quarterly drop here at 24%. samsung has forecast for the second quarter. multiple elements at work here. they say increasing competition from low-cost chinese vendors, even some european vendors have an impact on sales. apple wrapping up its competition in the high-end space, particularly with those phones with the large screens which will go on sale later in the year. has, the korean won appreciated. at work heregs that have contributed to this decline. the good news, samsung forecasting a return to profits
in the third quarter. increasing sales in china is booming. we will see if that comes to fruition. >> samsung is talking about how some of its employees have been taken hostage and the fact or he in brazil, maybe some phones stolen? tell us about that. >> this is a curious story. you don't expect the world's largest smartphone maker to become the victim of thieves. that is what happened monday morning in brazil. 20 bandits apparently held hostage 50 employees. they came in 10 trucks and made away with 40,000 units rodda like the galaxy tablets well as the galaxy smartphones. it adds up to 6.4 million dollars in stolen goods. police say they may have an idea of who may be responsible. samsung is happy that no one was hurt and that insurance will pay for this. it goes to show that if you are
a major global electronic brand with security, you may run into challenges in a place like brazil. that is a remarkable story there, guys. memorabley the most story of the day, thank you very much. >> we will get a snapshot of who theeading the race to be world's largest luxury carmaker. hans nichols joins us from berlin. what are you looking for in terms of numbers from bmw? >> we're looking at the margin to see if bmw retained its lead. we already know who is in third place. that is mercedes, the iconic rant. take a look at them. we have mercedes in the 783,000 range. audi a good 100,000 more than that. take a look at china. you have seen explosive growth
in china. audi is an entrenched brand there. at 100 35,000. audi all the way up at 265,000, almost double mercedes's sales. we will wait to see what bmw does in china as well. you see mercedes strength in the north american market as well. they are at 151000 and audi all the way down at 84,000. last year was a banner year for all the luxury automakers. it looks like it will be another order of finish this year with numbers that frankly are eye-popping. hans, tell us about the great expectations for mexico. some fairly fortuitous geographical positioning, i
suppose. >> it is partly geography. jim w will be opening their second plant in north america in mexico. they have one in spartanburg, south carolina. labor costs are lower in mexico. take a look at this, a billion-dollar plant that they will be building their. the capacity is to build a hundred 50,000 new autos. look at the auto companies and they have some legacy debts, which are north america and europe. then they have the china bets. it is really in china where you have seen the explosive growth. they are selling suvs there, not convertibles. >> hans nichols joining us from berlin. >> finance ministers are in brussels amid a war of words between italy and germany. matteo renzi is pushing for more flexible approach to eu budget rules. jonathan ferro joins us. is he going to get what he
wants? >> he may well do. what he wants is not very clear. it is up in the air at the moment. what he goes back to is a debate over jean-claude juncker. at some point it looks like matteo renzi and italy may side with the u.k.. then i did an about turn. it had nothing to do with the u.k. and very little to do with jean-claude juncker. they had more to do with angela merkel in germany on an issue, getting her support to get a concession later on. pushing for budgetary flexibility. -- the dutch finance minister. something they may think about. >> yonkers is pretty much a done deal in any case.
kers is pretty much a done deal. is the prospect of a third greek possible? it sounds like the greeks won't have it. is that meaningful? >> if the greeks don't get it, of course is meaningful. >> presumably under the conditions that are being offered. >> was really interesting for me right now is the debate with matteo renzi that erupted last week. he pretty much pushed back at what matteo renzi was saying. for matteo renzi, the european central banker is not a politician and is not any part of this. what interests me is the war of words between those two. that is what we are talking about. and matteo renzi. europe longs to european
citizens, not to bankers. now, is that if this is up for debate today and they're more flexible on the budget side, the risk i saw will start to level off. it proves there is flexibility for the budget, but they don't push forward on reforms. >> i find it amazing how the want to argue for more flexibility, which is basically what germany did some 10 years ago. >> and it worked. >> it work for germany and these of been the ones that have been expanding austerity. still to come, only in an emergency as one ecb board members said, they should only consider the gram such as quantitative easing if the european area is on the verge of deflation. we will talk about whether we are on that verge or not. stay with us.
new product and demand for displays will boost product sales in the third quarter. could be valued at more than one billion euros. siemens is artie spinning off its hearing aid unit. exploring a sale of its business almost three years after it was taken private. the belgian over-the-counter health care company could fetch more than $4 billion. welcome back to "countdown." i'm an edwards. .- i'm anna edwards >> the central banks long-term loan program will take time to stimulate the economy. or need at expect quantitative easing in europe any time soon. for more, we're joined by the head of fx strategy and much more at nomura, i want to ask
you about the euro. is 1.362 high? value and ise the that happening? >> if you look where the euro has been traded, we are right in the middle of the range. in that respect, maybe it is fair. he also have a record unemployment rate at a deflation problem. this is where you'd expect the currency to trade cheap and it is not. i think that is a problem and airbus why you see the comment earlier today. there's a need to have some support for the currency, not just having a neutral currency. we are not getting it yet. i would say that measures have been taken by the ecb in recent have at least stopped the euro from strengthening further. the flow is showing some signs of moderation. >> would it be fair to suggest
that the policy enacted by the ecb last month has not been affect of? we don't know whether the euro would have -- where the euro would've been had they done nothing. >> the euro had been on an uptrend since the summer of 2000 12. now it has stabilized. maybe the policy has been successful in that regard. >> what do you make of these comments about patients? patience is a virtue. the quantitative easing that was expected for some people to do has not been forthcoming. yet still the euro remains at these kinds of high levels. why is that? why is it so shy? does it have to do with flow going into european equities? >> last year, we had 250 billion euros worth of foreign money coming into eurozone stocks. that definitely played a big
role. that flow has continued up until very recently. i follow these indicators very closely and it week to week basis. now they're looking at bit softer. the big picture strand is still strong. i far as quantitative easing, think the ecb is looking to see what is the effect of the measures they have already taken. that is going to take some time to see through the system. i think by the end of the year they will probably come to the conclusion that these are not going to materially alter the inflation all outlook and then they will have to make that choice. emergency situation? is it enough to trigger qe. is it going to amount to anything? >> this is a fundamental debate within europe. we have obviously implemented very tight budget rules during the crisis, and it is a
straitjacket. it is very hard for these countries to generate growth with a debt overhang that they still have and the inability to have flexibility in their budgets. this is a fundamental debate. >> does renzi have a point? flexibility when they made changes to their economy. now italy at the same situation and they should also be allowed flexibility. >> i think he has a point. what do you expect if we move over to the u.s. from the fed? we saw the s and p fall a little bit yesterday. some concerns that the decision to hike rates might come earlier than originally anticipated. theou think that is on curves? yellen doesn't sound like she is hiking rates, does she? >> it sounds like she hasn't really looked too closely at the data.
even the uptake we have had in inflation in the u.s. over the last three months, the chad -- the fact that she is not changed the tone at all on the back of that suggests to me that she really wants to -- eventually they will have to change and it will be very binary from being one side to the other side. why isn't there a bit of gray when it did -- when the data is improving? not responding to the data in a way that you think she should the? >> at think it has improved very materially over the last few months. i think the said should recognize that. >> the minute they recognize that the data has improved as you suggest, people will stop speculating even more than they already are. >> i think it is ok to have some speculation. have some uncertainty in the market rather than pretending that his rate hike is very far away. i think you will see other
-- >> howght need to close is the fed rate hike? when is that hike coming through? i would say our debate is whether that could happen earlier. if the unemployment rate continues to come down as fast as it has recently, i think the risk is it could be even earlier. >> how about the aussie dollar? you've called it one of the last trades out there. is it going to continue or is that pretty much it and people are starting to get jittery? mode have been in this where they have done very well. in addition to that, the risk around china has faded away. that has been the background for that trade.
>> welcome back to "countdown." i'm ryan chilcote. >> we are back with you and jens big of nomura -- with norvig of nomura. are at quarter-century lows now in terms of fx market bulletins. >> i would say every investors speaks for some movement in the market. there have been very narrow ranges over the last couple of weeks. muchdn't really get movement. i think you are right, in terms .f catalysts for volatility i would say the equity market has also been very stable for the last several months. if there is some retracement there it will always shake things up a little bit. the main thing i am focusing on
in our research is trying to get the timing right on the fed. i think it is absolutely crucial. >> exactly how does the fed and their discussions provoke volatility? because there are various board members and they may disagree and people try to read >> we haveves or -- a situation where we still have very short-term interest rates. we have that for a multiyear. . i think it will be a major shift in the market because you have , who reallynvestors taylor how they fund their positions and so forth based on the specific constellations. if that shift, even though moderately, it would be a big change in the market. i think that is what we are looking for as a catalyst for movements in interest rates, currencies and other actives.
>> we saw something that was partly fueled by concerns of interest rate hikes might come sooner. that something we should expect to continue? >> yes, that is always a risk that we have at this point in the cycle. run-up,had a good multiples have expanded considerably in a lot of places, including the u.s.. discount factor goes up, it is definitely a risk we have to be worried about. be thisems to , the view ofeature the world as dictated by janet yellen. it seems to be the thing that everyone is hanging on. >> another thing i'm focused on is this -- we have had a two-year recovery with very strong inflows. i think that is showing some signs of moderation. chinese buying of euros is a function of their reserve management. it is also moderating.
there are a number of uses in the flow picture in europe that is looking less european. i think it is more a function of their ongoing accumulation of reserves is less. their ongoing cash flow perspective, they had to buy less than they -- they have to buy less than they had last year. >> it is great to get your response. >> a stock with speedy returns. we speak with an investor who says not just bmws but bmw shares are going to push forward. he's predicting a 10% average return every year for decades to come. that is right after the break. ♪
rome is flatlining. the -- helevel of wanted down to 10%. is that achievable? that is a note that i found this morning. the euro is becoming less attractive to 62% of the central bankers that were surveyed. keep that in mind as you look at it. it is just juggling around. originally we had the yen rising, we saw japan four surplus.quarters of obviously, imports dropping for the first time in 19 months. the reality is that we're just on sing off that low in the dollar, so keep an eye on that, . there is irony, but two. >> israel has carried out more
airstrikes in the gaza strip overnight. the strikes followed rocket fire by the palestinian islamist group hamas. bulgarian finance minister has exclusively told bloomberg that the country has no plans to sell bonds to international investors before next year. union's course member and/or its worst credit -- financial crisis ever. ukraine's government has accused the russian rebels of destroying seven bridges. this comes after ukraine recaptured territory in the east of the country from rebels. you leaders have said that sanctions could be applied as soon as today to more russian individuals if they back the insurgency. about what ise happening in ukraine, ryan. process is being made by the
sizable compared to the past three months of the crisis that we are seeing now. taken calledy was crematoriums. places like donetsk which is a large city, and lugansk remains. it is one thing to take a city of 50,000 to 100,000 and levels are really digging in. onetzk is city like d where you will see everything coming out. it will be that much more difficult to attack. we talked about the richest man in ukraine who has a lot of factories in the east of the country, saying the central government must not bomb places netsk because it will casualties.ive
>> they could apply further sanctions as soon as today on russian individuals. >> this is just painful. it is like when i tell my son i am going to punish him doing something and then i don't, or i punish him in a really mild way heard my son knows when i am doing it. that's what it feels like with the eu. talking about an expansion of the list of individuals that would face asset freezes and travel restrictions. it is not a whole lot, it is not pictorial sanctions. they're just trying to catch up to the u.s.. countries like italy, france, austria, slovakia and others really don't want economic sanctions that affect their own companies. >> there's another meeting coming isn't there? >> that is the operative word, could. i wouldn't bet on it, but that would be their opportunity if they don't do something in the
interim. let's talk about the car figures. >> bmw will release its latest sales figures for the globe. he has money and bmw as well as some of its competitors like ima and porsche. i just took a look at the stock, it is up 10% this year. r big thesis is that this is the stock to own because it outperforms everything under the sun. so, give it to us. outperformbly won't everything under the sun, but bmw owns a very profitable and sustainable business. chart fork at a bmw the past few decades, you will realize that it typically performs with more than 10% plus per annum on average.
i think these past performances are sustainable for the decades to come as well. nothing has changed in bmws business. it is a market leader in premium cars. those are effective barriers against entry from competitors. >> let me ask you about that. obviously, i get the fact that it is complicated to go from not making luxury cars to making luxury cars. there are a lot of midmarket carmakers out there that are starting to add some of the bells and whistles that bmws have. i am thinking about vw with its facade. witht. they're coming out this function with the new card were you can see road information right on the window in front of you. no? is a editor to bmw,
t, bute not the passa maybe audi which is owned by volkswagen. guess is there are five --panies in the world that this is toyota and volkswagen and mercedes and bmw. even if you have this technology, you cannot easily conquer clients of bmw or mercedes, because you lack the image. ofyou look at the motivation somebody who is willing and able to spend 50,000 euros on a car, he probably won't opt for a passat. even if volkswagen car, the that in their
take rate will be much lower than bmw or audi. rate our buyers going from the general car market into the luxury sector? how fast is a growing compared to the rest of the car industry at the moment? >> in the past decade, the share of the premium manufacturers in car markets grew steadily, outperforming the no image producers. i think the trend is persistent. one reason is that relative to our earnings, cars are getting cheaper and cheaper. get in there people position where they do not have to buy the cheapest offer, but something they like, something solid image.
>> word you see that trend as being vulnerable? where is that? in the united states? parts of asia if we see currencies depreciate? where do you see any vulnerability to that bullish case for the lecture economy or his? -- economy car makers? >> we have relatively high fluctuations in sales. are both global brands. -- theireasily fluctuations are smaller than those that are limited from single markets. the main risk to these premium
car many factors would be that -- >> wewill invent appreciate your time. mayer joining us. >> now, as the tour de france heads into its fourth stage, bloomberg had the rare opportunity to ride inside the chase car. this was shot during very tour suisse. he gives us the inside view from the team technician. >> it is the second to final thee of the tour de suisse. saxo car runs behind the race. >> they're pinning their stage hopes of one writer, roman
kreuziger. he goes faster, than 100 kilometers an hour. fabrizio has raged for years. he has broken both arms, both collarbones and ribs. we have one guy here. he is suffering and can't sleep. he is still fighting. through the race, a group writers breaks away from fabrizio makes a decision not to chase. >> the other seven riders will spend the race protecting roman from the wind. they sacrificed their chances of
winning for the leader. after nearly 200 kilometers of writing to the swiss valleys, ricio makes his decision to attack. the winner will be decided on this hill climb to the ski resort, a dash to the finish. he screams down the radio to his teammate. it is not enough. yeah, he finished second. that is good, but you know, we were supposed to win today. roman finishes three seconds behind the winner. close, but disappointing. agnes bennett, bloomberg. -- angus bennett, bloomberg.
>> i went on the bus with the team, which is also cool. i think angus got the better angle. shows the team nature and how much self-sacrifice there is for the greater good. >> a bird can't adore is one of the favorites in the race. are eight guys called domestics. their job is to get him up front so he can pounce when he is ready to pounce, which he will do in the mountains. he hasn't done it yet, but it is coming. >> it is a ruthless business. haveat you're doing banks in common? you will remember the name and the secret to success? will find out next. -- we will find out next. ♪
lenient when giving red and yellow cards. the game saw 54 fouls, more than any other in the tournament. the brazil team jersey is selling for 35% less in some brazilian shops ahead of the finals. many fans are opting to buy fake versions instead. was $102.for a jersey aireussian multimillion has built a business empire that -- somewhat ofs a richard branson of russia. now he is adding cycling to the mix. i talked to him about his secret for success. >> you had a beer business, a dumpling business.
a bank, and now a cycling team. what do you reckon the secret to success is? >> people. they make the difference. you have to have talent to choose the right people around you. you get loyalty and create the right goal. everyone should move in that direction to achieve the goal. it is very difficult because usually the balance of people, they are very difficult to manage. they have egos and so on. therefore, it is hard work. difficult -- it is difficult to get good people around you and keep them together. that is the secret.
end of the day, it is not me or richard branson or someone else or rupert murdoch. it is the people around them. the ingredient to success is getting the right people around you to do work together for the same goal. i stillr difficult. have a role as the best team in telephone. that is why we can create the best team. the british think they're the best. now it is the russians time to kick their asset cycling. kick their butts, i'm sorry -- cycling.r asses in
kick their butts, i'm sorry. >> very nice. due tos & spencer is publish their sales results later today. art bolan will have to face investors yet again at the annual general meeting. here with what to expect his european business correspondent caroline hyde. i went to marks & spencer what iay, and based on saw, the women's section was pretty empty. the only people in there were in the men's section. i guess it doesn't load well going into this meeting, does it? >> especially when it is their new collection which people have been excited about. chem assaults sale, 50% off. i'm surprised you weren't arrested for loitering around the women's clothing section.
click the general merchandise is the week went. his largest clothing retailer and the whole of u.k., marks -- markets -- marks & spencer. straightd be the 14th drop in a role in terms of sales. general merchandise center dot about 1%. meanwhile, the food continues to outperform. margin from the food business. the chunk of the prophet tends to be in the clothing. this is despite the fact that they have a new design team in. they have blended earl. she is had to collections now under her belt. goodhad the great and the with these famous models coming in. he spent a lot on this marketing campaign, but it doesn't seem to be inciting or exciting the younger generation, it seems to be there really targeting the
mid-30-year-old females. we're losing share at marks & spencer's. >> in a word or two, what does bowling have to do to keep this on board -- what does boling have to do? >> last quarter for the first time, it broke down general merchandise. we saw the closing area saw a little bit of growth. if we see that once again and if we see that he is sticking to his promise of the overall margins, the profit goes up by about 1% acres he is promoting less. maybe that will ease investors concerns a little bit. >> caroline, thank you. if you want to get on a plane, you will have to turn on your phone. we would tell you about new travel rules when we come back. ♪
you will have to prove that it can be turned on when you go through security according to new rules announced by british airways. this follows advice from u.s. authorities about new threats and new regulations that are being brought in with regards to security by various airports. when you're traveling to the u.s., you will have to turn on your phone or any other electrical device when you go through security. i guess it is to prove that it works. apparently, even if you say that you will abandon it, they will not let you continue. even if you buy at duty free, you will have to prove that it works. going with cycling. i came out of work yesterday at 4:07 p.m. in the city and the tour went by and it was wicked. all the front runners, all the main favorites are there. it will be an awesome tour.
>> buffets miss estimates because of growing competition from china. >> today's annual general meeting where they will vote on their embattled ceo's pay. >> governments get more leeway on debts and deficit targets, a measure pushed by italy and france in the wake of austerity. >> welcome to "countdown," i'm
ryan chilcote. >> welcome to the second hour of the program. , as the goldx industry supports plans to change how the metals and smart is priced. we talked to natalie dempster to find out how the century-old fix will be reformed. that will be at 7:30 u.k. time. klm have brought down there guidance in terms of the announce of earnings before interest tax and appreciation that they will be targeting. 2.2-2.3rget will be billion. this comes hot on the heels of some gloomy forecasts coming out of lufthansa, of course. the industry seems to be going through some tough times. overcapacity to north america and asia have been hurting yields. prices their ability to
of tickets. that is what seems to be ailing the business. their julyying that and august bookings reflect overcapacity, capacity increases of 1.8% versus a year earlier. we will watch that at the open, as well. >> marks and spencer is .ublishing sales results ceo mark boland will have to face investors later today. is europe'sthat business correspondent caroline hyde. caroline, i guess we have got huh? ews, >> sales down by 1.5%. there was more than we had estimated when we're looking at all the analysts addictions. of concern is clothing. remember, the x-ray stripped out clothing.
they have, but it is not doing so well. clothing, was he like for like -- there have been m&sw teething problems, .com. we have seen womenswear picking up. julie -- it is clearly children's clothing that is not been flying off the shelves. they have been focusing on womenswear particularly. they just had new ones at the shelves in july. , they're desperately trying to coax some sort of feeling of security that they are managing to foster a turnaround. clothing is still down. general merchandise is down by 1.5%. that is a concern. they're sticking to their margin targets.
they say would you are focusing on profits now. they really started hitting the sales panic button before many of the other high street retailers did. that aid into profitability. they're not trying to stop that. they want to try and foster growth in other ways. >> they have invested so much money in their internet offering . they're talking about how that was going to take six months. for some analysts, that was raising a few warning flags. whether there are managing expectations around with the internet could deliver. talk about the targets of this business is going to have to go up against. >> if you're looking at anything that isn't food, they points. one and a half void remember, mark boland does not have the best record of meeting
targets. he had to downgrade his sales last year and he still missed them. initially, he set out at 212.5 billion pounds. he didn't manage that or the 11.5 billion pounds and came in at 10 billion pounds. he is not been a great record for target meeting. >> is he supposed to get a pay raise? >> people will want answers about clothing in general and the website. he says customers feedback is pretty positive about this. he says it is technically resilient, but it hasn't -- it has been impacted by the settling in of the new.com site. point,elation to your aboutareholders talk remuneration being the primary issue. to caroline's point it wouldn't be such an issue if they were happier with the performance.
caroline, thank you very much. lender's second-largest will be the next and to resolve alleged u.s. sanction issues according to a person familiar with the matter. we speak to our correspondent hans nichols who is live in berlin. >> $500 million is the potential commerzbankban for for sanctions violations. this is a similar infraction bas had. pari one is commerce bank, not deutsche bank. when the new york times broke the story overnight which bloomberg has confirmed, there was a bit of speculation that commerz was a dry run k. at theutsche ban
same time, there is no felony or no criminal discussion with commerce bank. if you look at what the provisions are for legal offers, the 1.2 the one -- in billion range. u.s. regulators shifting their attention from french banks to german banks? that means deutsche bank. will they be next? that is where we will be knocking on doors, trying to find out. interesting, hans nichols in berlin. >> the world's largest smartphone maker is forecasting a recovery for later in the year. by zeb eckert in hong kong. giant, thea tech world's biggest smartphone maker as you rightly point out. it has been a rough start to the
year for samsung. that is the cause of increasing competition in china as well as from some european phone makers as well as apple. it is developing its own larger screens and should be on shelves later this year. that is the galaxy and those larger phones that samsung specializes in under pressure. profits thatasting fall sharply. we're talking about a drop of 24% from the previous. period. this is the third straight quarterly drop. have in the korean won hurt earnings. silverd news, the lining, is that it gets better. the wilson -- they're saying the third quarter will see improvement. new products coming out will help lift those sales figures as they go into the rest of the year. >> some intrigue today, right?
some of its workers were taken hostage in brazil and somebody made off with some phones? is that right? >> some phones, yes. this is a serious one. we're talking about 50 workers taken hostage. outsidee at a factory of sao paulo, brazil. 20 thieves came in with 10 trucks. they stole 40,000 units of samsung product. you can guess they will be galaxy tabs, for example, with more than -- worth more than $6 million. the bandits did get away. they do have ideas on suspects. no arrests at this stage. for its part, samsung says they're happy none of its employees were harmed in the incident. reviewing security procedures and insurance will make up for it the money that was stolen in product. >> that is a lot of money. >> european finance ministers toher in brussels today
listen to a war of words between italy and germany. jonathan ferro joins us now with more. then, demandity, italians. >> it blue sky thinking. they're asking for some flexibility, whatever that means. surprise, surprise, the irish finance minister seems to be in support of that as well. it goes back to the jean-claude juncker debate, because what m t matteo did is signed with angela merkel on the jean-claude juncker issue and followed up with ok, we would like some flexibility on this. it looks like it will be on the agenda today when the finance ministers meet. politicalest european moves. >> we always see this between
the two germans and italians. is renzi going to come out on top? >> i think he does specifically jensse he does not think weidmann is part of this debate. the germans have tried to provide stimulus. it is a very thin line, perhaps more sensitive now that they have unveiled these new measures. says you don't have anything to do with italian politics. citizens.cks european it doesn't belong to european bankers. that list that tells you about how matteo renzi will approach officials in europe, and specifically with the germans as well. the germans and jens weidmann have dominated this debate. matteo renzi elected specifically because they wanted to push back against the european elite as well. as one of the reasons why it
matteo renzi came out on top. he will push back and heart. >> he knows he will probably have to win some -- some support. fascinating for me is that renzi has decided to use as an example of where flexibility was granted and achieved is the german case. the germans are taking a hard line on austerity and then he pulls out a bag an example of when you are flexible on your own budget targets, look what you managed to achieve. >> the germans have always used example of as an what everyone else in europe should be doing. the key is that you see the economy start to settle down somewhat. you see the ecb start to do more. if you give these countries the flexibility that they desire, if any specifics come out, if they get the flexibility, they won't push forward on reforms. really, we're talking about france. interesting that an ecb board
member is talking about patients being a virtue. in terms of giving the long term measures that the ecb has put in place time to work. and they're pushing back against any calls that we should see anymore easing from the ecb now. >> pretty much every investor that we spoke to said we overrate european equities. massive lyrical hurdle to qad coming. she is that an emergency. >> john, thank you very much. jonathan ferro with the latest from the eu finance minister meetings. >> gathering steam on the back of jobs data. we're looking at their earnings momentum, volatility and a lot more.
for a limited time only. largest is uber's market. the unique could be valued more than one billion euros. the hearing aid unit could be valued at more than one billion euros. >> welcome to countdown, i'm ryan chilcote. .> and i'm anna edwards the time in london is now 17 minutes past seven. here's the analysis on volatility. chief investment officer at credit suisse private banking, michael o'sullivan. s&p, what do you say, 55
days? >> 55 days without a 1% move in the s&p. and credit and bonds, all of the asset classes have been at incredibly low volatility. if you are an investor, i think if you're mentally scarred by the crisis and expect these prolonged moves higher in volatility will have been caught out i this. i think analysis shows a volatility tends to move in regimes. of high periods volatility or long periods of low volatility. we tend to get low volatility when you get good micro data which we are beginning to get now. >> use a difficult time in financial markets, but maybe a goldilocks moment if you are in the real economy. your interest rates low and the fed not suggesting that an interest rate hike is coming yet
, and stock markets to in very nicely, thank you very much. is this a classic case of financial markets and the real economy on different tracks? >> at think there's a big debate on that. i think joe stiglitz has weighed in and he says the u.s. economy is weaker than people think and the stock market is too high. i think we are, at least in the states, getting to that goldilocks moment. the data is new -- is needed to hot nor too cold. old-fashioned people like me, if you look at the recent job. in the states, we begin to think that things are bright. with the non-accelerating inflation rate of unemployment. christmas, will people be thinking about are talking about inflation? i don't think there is an inflation scare on the horizon at all, but from where the numbers are today, they are just beginning to creep up. i think the fed have cultivated expectations that they will
remain supportive. >> interesting, because we had nomura in anx at hour ago. the fed would be making a change. you are not exact assure that is on the horizon anytime soon. >> nothing volatility is tactically to low. we saw a 10% move in the vix from very low levels. go to 14, 15,inly maybe 20 over the summer. if you have a volatility spike, the question is to run away or do you buy? you are still generally in this environment where central banks will provide liquidity to the market.
sullivan. you like health care. just a start, in these low volatility periods, historically cyclical sectors have tended to perform. over both of those. stocks over bonds as well. we moved overweight stocks in late may. we've caught much of the recent rally. it is a barbell approach to balance. you have a nice -- have had a nice rebound of the biotech stocks. >> is interesting, the debate in the u.s. move stock market last week and the dow going over 17,000, a lot of people are wondering whether we
will see any sort of correction. you're not expecting that if you're going further into equities. >> i think anyone who is expecting a correction will be vexed and frustrated. it is a hard environment to try to trade into. we are still quite elevated levels six or seven weeks ago. numbers had made a qualitative jump higher. earnings started to pick up and we believe we are in this low volatility regime. >> why can't we treat good news is good news and stop trying to second-guess the fed? there areing is that two factors. one has been a decisive pickup and earnings momentum. i think the quality of the data in the u.s. just made the step change. i think you have seen the level
of the last two payroll numbers. a lot of the lead in comes through as well. bottom inning to terms of the momentum. go overw the dow 17,000. how far can we go this year? >> we would see maybe another nextor 6% upside over the six months, beyond into the start of next year. sure, we could have full attila the or correction the summer, and how do you react to that? i think most people's instinct at this stage will just need to add more equity exposure. >> michael o'sullivan joining us from credit suisse private banking. break, the fed supports plans to change how the precious metals benchmark is priced. we speak exclusively to the world gold council natalie
>> welcome back, i'm anna edwards. markets themselves are not moving that radically. have a look at this. the ceos are saying they are rating the value of the euro. the impact on corporate earnings, $3.3 billion. in europe, the cost of currency is over four point -- is over $4 billion. the euro and fx traders are not listening to fabrice.
he wants to see the euro come down to around 1.25. this is the airbus passenger business ceo. inflation, disinflation that we have is because of the high value of the euro. 62% of those surveyed are less likely to want this in their basket than last year. ack to you, anna. >> commerce bank is the next likely to resolve u.s. sanctions. germany's second-largest lender may incur penalties of at least $500 million. ball carrier finance minister told bloomberg that his company -- this country has no plans to sell bonds. for --opean union's had membersr
standing in line to draw deposits from the two largest banks. comes after ukraine's army recaptured territory in the east of the country from rebels. eu leaders have said that sanctions could be applied as early as today to more russian individuals if they back the insurgency. called of troops for a possible ground invasion of gaza. it follows the worst out reagan violence between israel and the run territory in almost two years. elliott gotkine has more. exactly how tense are things that go is been a couple of years and sees of airstrikes that we are seeing. it is been almost six since we have seen an invasion. how bad could this get? >> it could get a lot worse, ryan. tensions are running high. what seems to have sparked things is the abduction of three
israeli teenagers and their murder. then there was the apparent revenge killing of a palestinian teenager. all in all, hamas has taken these things and started launching volleys of rockets into israel, something it hasn't done over the last year. it has been stopping other militants from doing so to keep the cease-fire that was broken at the time with egypt. israel has responded with airstrikes, at least 50 overnight, from the air, and also missile strikes from the sea. it is a very tense situation right now. israel calling up troops in the event that it wants to proceed with the ground invasion. things could get uglier before they get better, ryan. >> with the tensions mean in terms of politics echo x live
party scene repercussions in israel. the foreign minister whose party emerged with legal said he split his party off from netanyahu's party. he said he wants it a much tougher response to rocket fire coming from gaza. at the same time, israel has -- to form asked unity government for the palestinian territories. the u.s. wants hamas to be out of that government and it may get its wish as a result of his escalating conflict. our man ongotkine, the ground. thank you very much. >> a hundred years ago, the world was a different place except when it comes to gold. gold is long overdue for an update. howard minesessica
the history books and has a look at why changes needed. the shinye all know precious metal. how precious is it? how do we put a price on it? century, the benchmark price has been set twice a day, every business day, by a panel of banks in london. this --ess is called -- there is concern that the price can be manipulated. barclays has artie been fined. it lets her traders manipulate the price. now, fewer and fewer banks want to be part of the process. just for banks now decide to benchmark the price for gold. it is not a unique problem. banks now fit that
after -- now fit that price after deutsche bank old out. be new process will probably based on data from electronic trading. with a market worth $18 trillion every year, there is a lot riding on this fixed to a fixed. fix to a fix. >> natalie dempster. we are just 2.5 hours away from today's first time that the -- we don't know how this works. how does it? >> is an auction process. what will happen at the beginning of that process is the chairman will stayed in opening price based on where he thinks the market is trading at the moment. each bank will then declare that they're buying or selling interest at that price. the chairman will then either
raise or lower the price until an equitable price is reached. >> this is all in the phone. ofthis will happen in each the banks will of collected orders from the customers and they may have house orders, too. all those orders will be put into the auction process. it is much wider than just a billion banks themselves. they're taking orders from a number of other parties. a why on earth do we need fix? other commodity markets works very nicely without fixes. auto market for example. what is his need to be treated more like a currency and have a fix. ? >> we could take a volume weighted average, but that might be based -- one of the things people value about the fix, and actually it is not like libor,
it is based on real, executed trades, which i think is less likely to be manipulated. >> you can appreciate, given what happened with libor, the idea that four guys get on a telephone and decide the person , butmakes people nervous there is a possibility for manipulation. >> the fact it is fixed in the title is unfortunate. >> you do think the process should be reformed in any case. >> we had a whole host of users across a broad spectrum in the room, and we asked the question, is it something that should be reformed or should we scrap it and start from scratch. >> the answer was? >> the consensus was that there should be reformed. the aspect of the fix that many users still value, let me give you a couple of examples that came up yesterday. first was a factor that is based on executed trade. it is not like libor or a
court-based system. secondly, if you can trade the willmark race, your orders always get field. you can be sure that you can achieve that price in the process. secondly, the fact that there are two fixes the day, it coalesces liquidity. all orders are coming into the market at to set times. that facilitates the ability of very large trades to go to the market. if you think about the people who transact an old market, a lot of them are very big layers like central banks. but, there was also a clear desire to see some reforms in this process. >> what is driving that mean for -- that need for reform? what to do not like about the way it works at the moment? >> there were two main areas that i think need to be improved. one is a governing structure of it. we would really like to see an independent administrator or independent oversight of this process.
financial executives were there as observers. we need better transparency. deal withhave to modern technology when the system was set up. whated to be able to see is going to the fix. >> you say is based on actual is thatbut it is not -- just taken on trust or the people have to prove that they have trades at that price? >> is based on actual trade at needsment. the visibility to be improved so we can have independent and visible orders. >> when you say reform, not replacement, i get that, right? presumably it started on the telephone a hundred years ago.
just four guys standing in a room without carrier pigeons. a room, but ofn course i was a hundred years ago. >> natalie, thank you very much for joining us. one robotics lab in israel looks more like a george lucas fantasy. some robots walked, some slithered, but they are all advance military research. elliott gotkine got a look inside. >> behind the door of a mary schapiro's lab, a menagerie of robots. snake.s a >> it can be used for search and rescue. it can move around and even fly in the air. >> this looks like an extra from star wars. >> we use it for research on the walking robot.
for four-legged robots to walk quickly on rough terrain's, like boulders, the edge of a cliff. >> what are these ones? >> these are wall climbing robots. they are using magnets to climb metal surfaces. they're used for inspection of the hull of the ship, to see there is no bomb or drugs attached. are fundedthe bots by or destined for the israeli military. some are more impressive than others. >> perhaps my favorite robot is this. thate butler bought recognizes me using next box
next sensor. it will follow me wherever i go. you can use it to carry items, it will carry my notepad right now. they can be used in the military to collect dust to carry equipment. >> the prototypes are not for sale. the are most definitely not ys. cracks marks & spencer's is selling less and less often. we will have more on mns cost losing challenge. is coming up after the break. 7:43 in london, you are watching "countdown." ♪
rowland has been at the helm. this is an improving market. we are seeing 4% increase in greatest -- in british retail consortium sales. sales earth is deteriorating again in terms of general merchandise at marks & spencer's for 14 straight quarters? this is the biggest clothing retailer in the united kingdom. it seems to be what many analysts are saying that the medicine is right, he's doing the right things, he's making the shops more attractive, he's got a new design team in there, but it is taking too long. when i was there yesterday, there weren't many people in the shop. though more people in the men's section, and yet the data suggests that it is womenswear that is coming online. it was kind of empty when i was there. >> they're desperate to say that
to us. womenswear is improving. that is the headline of the statement carried by the way, clothing deteriorated. the standout performances the food, once again. it will take time to win hearts and minds to get us excited and feeling that marks & spencer's is back in fashion. a slightlyg different road, and that is maybe one that the investors will like in the longer term, they are more focused on profit. yes, sales are deteriorating, but they are doing less sales. that means that our margin and profitability will improve. they're sticking to that target overall. what is interesting is also what mark boland will face at the general meeting. his pay is falling 26% for the previous year. he has no bonus, it is just over 1.5 million pounds. still, you're likely to hear many vote against his pay package.
they are the biggest independent corporate government advisors out there in europe. they're saying this is an excessive a policy. actually, he has been in line with the right results. >> the women are certainly getting their glossy magazines, ryan's they don't take advice. >> caroline, thank you very much. germany's second-largest lender will be the next bank did the accused of sanctions violations. we are joined by hans nichols live from berlin. i guess in the light of what happened to bnp, people are casting around to find which bank will go next, then, hans. >> that is one way to look at it. the other way is the half full way and say this is only half $1 billion compared to the 8.9 billion that the np did.
to person familiar with the matter, it was there a felony conviction for commerce bank, and it could be done by the end of this summer. this summer you could have conclusion, at least on this side of litigation, that are raw onolations cuba and myanmar. the question on all this, we will be knocking on doors asking what this means for deutsche bank. the firsce bank is st to be prosecuted? and how big is that whole going to be. be. >> we will find out why these companies are
was it ge finance ministers meeting getting your interest? >> i think they put really nicely. tokel has almost signed on the report by renzi. it is a very interesting take. the way they make the analogy is that when roy came into power in aain, he was going to go for growth pact. the whole european landscape. will disruptple the germans from their agenda. are put there for a reason. >> i like the way that you keep saying that the germans break the rules in the early 2000's, but what good it did them. >> everybody has a very short memory. it will impact markets per se, but it has been a backdrop. there's been a whole debate about greece.
could they, would they, should they need another bailout? headlinesread those for quite a while. maybe i just missed them. are a little bit higher. the dax is up for. >> in the headlines are also commodities. >> gold is coming off a three-month high. morgan stanley saying that gold will drop over the next five quarters. an eye on the mining stocks as well. european mining raised positive versus negative. london miners raced to equal rate at barclays. is next, don't miss more on the gold fix reforms, plus lucy mcdonald chairs that shares her views on the latest prospects. >> stay with us, because we will
>> welcome to "on the move." i am jonathan ferro. we are moments away from the start of european trading. a little bit higher after the selloff. he in the u.s. as well off of record highs. look away now. talk.s just an emergency overweight in europe on the prospect of qe. you may not get it. caroline hyde and hans nichols. withine, let's start yield. >> falling out of fashion with shoppers and maybe investors. they have been falling. general merchandise.
they are trying to reassure investors that women's wear is improving. i will be back with more on the ms results. >> will be looking at commerzbank and a potential summer of several -- settlements. sediment on sanctions for germany's second-biggest bank. -- settlements on sanctions for second-biggest bank. we are just at the beginning. >> thanks very much. i asked about $500 million. they got off easy considering how much they put to one side. that's what we are watching. . will be watching production i am sure manus cranny will be as well. >> the european ti